RALEIGH, North Carolina (CNN) -- Former Democratic presidential hopeful John Edwards talked a campaign aide into claiming he fathered a child born to Edwards' onetime mistress, sources familiar with the issue said Monday.

Andrew Young, former aide to Sen. John Edwards, claims Edwards knew all along his mistress was carrying his child.

Edwards admitted to his affair with Rielle Hunter in August 2008 after months of denials, but said he could not have been the father of Hunter's daughter, who was born the previous February. Former Edwards staffer Andrew Young has said he was the girl's father -- but has recanted and says he made it because he believed in Edwards, lawyers and others familiar with the matter told CNN.

Young was married with children when he claimed to have fathered Hunter's child. He never signed any affidavits or legal papers, however, and reversed his claim after Edwards, as one of the sources put it, dropped Young "like a hot potato."

The news comes as a grand jury in Edwards' home state of North Carolina is investigating payments made to Hunter -- who had been hired as a campaign videographer -- by the former senator's campaign and supporters. Hunter was photographed entering the courthouse where the grand jury was meeting in August.

Edwards paid Hunter's production company $114,000 for a series of videos featuring him before and during his 2008 campaign. He said in May that he believed "that no funds from my campaign were used improperly."

Sunny Hostin, a former federal prosecutor, told CNN that if Edwards willfully failed to report payments to his mistress that could be considered campaign contributions, he could face felony charges that carry prison terms of up to five years.

"A lot of this comes down to civil penalties -- $5,000, $25,000, $50,000," Hostin said. "But there are also criminal penalties -- and when a grand jury is convened, that usually is what the prosecutors are looking for. They're looking for a criminal indictment."

Edwards served one term in the Senate and ran for president in 2004, ending up as eventual Democratic nominee John Kerry's running mate. His 2008 campaign foundered after a string of third-place finishes in the Democratic primary.

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The New York Times reported in August that Young has submitted a book proposal in which he tells publishers that Edwards knew all along that he was the father of Hunter's child -- and that he promised to marry her after his cancer-stricken wife, Elizabeth, dies.

Edwards has said in the past that there was no way he could have been the girl's father, given the timing of his relationship with Hunter, and that he was willing to take a paternity test to prove it. But Pigeon O'Brien, a friend of Hunter's, told CNN's "Anderson Cooper 360" that Edwards and Hunter were still romantically involved when the girl was conceived.

"He assured her that their relationship was a serious thing and they had a future together," O'Brien said.